Fitch Ratings has revised Nigeria's Long-Term Issuer Default Ratings (IDRs) outlook from Stable to Positive, affirming the rating at 'B'. This revision is based on the federal government's ongoing policy reforms and increased confidence that the current momentum will not be disrupted by the general election due in early 2027. The global ratings agency highlighted key drivers behind its revision, including expected policy continuity, stronger external buffers, and a restrictive monetary stance.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, reacted to Fitch's positive outlook, reaffirming the federal government's resolve to sustain reform momentum and a disciplined, market-reflective, and transparent foreign exchange regime. According to Fitch, the Outlook revision reflected ongoing reform of Nigeria's policy framework and its increased confidence that the momentum will not be disrupted by upcoming elections. This development underscores the progress made in implementing policy reforms.
Fitch noted that the monetary and exchange rate reforms had supported greater naira flexibility, disinflation, and faster-than-expected FX reserve accumulation. The agency also observed that improved reserve quality enhances resilience to shocks. Additionally, Fitch stressed that continued reform implementation was strengthening monetary policy transmission and should support further disinflation, although inflation will remain well above Nigeria's peers.
Nigeria's ratings reflect its large economy, a relatively developed and liquid domestic debt market, large oil and gas reserves, and an improved macroeconomic policy framework. However, the rating is constrained by weak governance indicators, high hydrocarbon dependence, high inflation, security challenges, and structurally low government revenue relative to peers. These factors highlight the challenges that Nigeria still faces in its economic development.
On the expected policy continuity metric, Fitch noted that the incumbents are well-positioned to win the early 2027 elections due to the ruling party's control of the majority of Nigeria's 36 states and a fragmented opposition. As a result, Fitch expects broad economic policy continuity, including in relation to reforms that have contributed to improved policy credibility, higher external liquidity, and enhanced resilience to external shocks.
Fitch reported that gross FX reserves rose to $54.9 billion on September 25, 2026, from $32 billion in mid-April 2024, supported by increased formalization of FX transactions, strong portfolio inflows, and higher export receipts and remittances. The agency forecasts that the current account surplus will widen to 6.4% of GDP in 2026 but expects it to narrow in 2027 amid an expectation that global oil prices will fall to $70/barrel from $87/barrel in 2026.
Providing more context, Fitch pointed out that reserve quality had improved as the Central Bank of Nigeria (CBN) reduced its FX liabilities, with net FX reserves at $34 billion. The agency identified risks to its baseline, including significant policy slippage, fiscal loosening, weaker capital inflows, or major social instability. These risks highlight the need for continued careful management of Nigeria's economy.
Key points
- Fitch Ratings revises Nigeria's outlook to positive, citing policy reforms and stronger external buffers.
- Nigeria's ratings reflect its large economy and improved macroeconomic policy framework, but are constrained by weak governance indicators and high inflation.
- Fitch expects broad economic policy continuity, including in relation to reforms that have contributed to improved policy credibility and higher external liquidity.
